Atty said to buy an inexpensive car...

[nikkie876]

..to be able to qualify for a Chapter 7. I'm totally confused and can't wrap my mind around it. We are a one car household of 6 (my husband has a work vehicle that they pay everything for) My oldest is turning 16 in November, and my atty told me to purchase a car that does not have more than $3k in equity and we would qualify for a Chapter 7. If we do not do that then we will pay approximately $800 in a 5 year Chapter 13.

My husband's boss said he would sell us his 95 Jeep for pretty much nothing, BUT it doesn't run, it needs a transmission. Now if we were to purchase this prior to filing does it have to be licensed? Obviously if its a non operational car we can't get inspections, tags, etc. I just wasn't sure what they looked for as far as a second car. Should we get a car that is operational?

Do we have to own the car X amount of months before we file? I just think buying a car right before filing so we can get Chapter 7 is probably frowned upon by the trustees. I just don't want to get ourselves in deeper while we are trying to dig our way out. (BTW, I'm the only one filing since all the unsecured is in my name)

Thanks in advance for your advice!

[SMinGA]

Ask for clarification from your atty. I think perhaps he is saying you have too much DMI now, but adding a car payment + full coverage on another vehicle will change that?

When you calculate your actual net income less bills/expenses - what do you come up with?

[nikkie876]

Thanks SMinGA...I asked the Atty about the car, he said that we don't need a car payment, just a second car to push us over into a Chapter 7. He said we can just pay for it outright would be the best bet.

To be honest our calculations are so catty wompus right now I can't make heads or tails of what the attorney is doing. When I did it on my own prior to talking to the attorney we had approximately $700 left at the end of the month. Since then he had us re-do our medical expenses, we went to the pharmacy pulled a years worth of meds for the family, pulled all the co-pays, etc etc. We were WAY off with our previous medical expense, we estimated$200 lower than the actual amount. Also since my husband isn't filing he had to provide fees that go towards his business expenses (dry cleaning, supplies, etc)

I haven't seen any numbers that he has yet, all our conversations have been via telephone. But today he called and said if I were to get a second car with no more than $3k equity we would be pushed over to a Chapter 7.

[ssmdem]

Maybe he's talking about the 2nd car expense allowed on the means test -- ???

[SMinGA]

That would make sense - but I'd still question the atty further before making a purchase if you're not certain. Afterall, the means test is only part of it. The schedule J list of actual expenses is important also.

Sounds like you're taking the right steps - confirming your figures now.

[ccsjoe]

I beliebe you're right ssmdem. He's likely talking about pushing your transportation and vehicle ownership exemptions from 1 to 2 vehicles in order to reduce DMI. That would make sense, however is there no other way to reduce DMI?

[angles]

We had received similar advice from the assistant attorney to the attorney we retained. At the time it seemed ridiculous to go into debt since we are trying to get out of it. He was trying to reduce our DMI and get us into reliable transportation prior to filing. We did not take his advice which turned out to be good for us because after talking to the attorney we retained it would not have done anything for us.

[tcreegan]

community property state?

Hello Nicky,

Not worried about the car, your attorney is looking for a way to boost expenses to get your DMI down. Doesn't want you to go over 3K b/c that is probably your exemption amount for a vehicle. No, the vehicle doesn't have to be licensed, tagged, or running for a BK (at least not in Colorado) but the title needs to have your name on it. Also you need a reasonable value, Kelly Blue Book, Carmax, local dealer, etc.

Bigger worry: are you in a community property state? If you are, the debts are owned by both partners. One spouse filing leaves the other responsible for the debt. Doesn't matter whose name the debt was in. Not a community property state.....whew!....you can file alone.

Hope this helps,

Tom in Colo

[optimistic1]

Hello Nicky,



Bigger worry: are you in a community property state? If you are, the debts are owned by both partners. One spouse filing leaves the other responsible for the debt. Doesn't matter whose name the debt was in. Not a community property state.....whew!....you can file alone.

Hope this helps,

Tom in Colo

That is false, you need to read the community property thread and stop handing out fearful advice, one spouse files on behalf of community, community receives discharge, game over for creditors.

[nikkie876]

Luckily we are not in a community property state, that's the one thing I've got going for me! LOL

[optimistic1]

Its actually advantageous to live in a community property state, but you would only know that if you lived in one, and spent 2 years researching the topic.

[tcreegan]

community property

Thanks for the correction on community property Optimistic1 !

I guess I wasn't being optimistic enough.....

Tom in Colo